Natural Resources Committee on April 30th, 2021

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

I'm going to continue on with Monsieur Boies. I'll pick up on something you brought up in your exchange with Mr. Patzer, I believe. You brought up an example about being able to use green energy from green sources when you were doing your projects. You used a Suncor windmill example.

I have a small but very innovative and very old power plant in my riding. It's Silversmith Power in Sandon, B.C. I believe it's actually the oldest operating hydroelectric system in the world. It's totally green. It's feeds off five creeks, so it's run off the river. There are no dams involved, but it produces the same amount of electricity all year round.

Calgary Transit wanted to use this power to run their electric transit system, but they were unable to sell those green molecules. They wanted to sell their green electrons to Calgary, but were unable to and certainly were unable to get the value for them because they had to sell it into the BC Hydro grid.

I'm wondering how we can fix that. Is this a federal responsibility? Is it a provincial one? Is it a mix? Where is the regulatory change we need to make, so that projects like that can get a fair price for their green electrons?

[Dominique Boies]

I'm really not an expert in regulation of new electricity, but I think one system that has worked in other jurisdictions is really the book and claim system where you can purchase your electricity because electrons are fungibles in systems across the country. You can purchase that electricity directly from that producer, paying him the right price for the use of a fungible electron on the grid. It's not the direct connect approach.

I think this is probably what is preventing the Calgary transport authority from using that green electricity.

[The Chair, Liberal, James Maloney]

Thank you, Mr. Cannings.

We'll go over to Mr. McLean for five minutes.

[Greg McLean, Conservative, Calgary Centre, AB]

Thank you, Mr. Chair.

I'm going to go back to Mr. Boies, please.

Mr. Boies, one of the things you mentioned in your introduction was that electrification will not get us towards our climate GHG reduction goals. I appreciate that because I think there's a bit of a mantra out there that electrifying everything is going to accomplish this.

As we say, there's no benefit here without cost. Can you talk about the cost that is actually attributed to your biofuels plant and the investment required to make that happen on a fixed-cost basis? How much CO2 have you measured that's involved in the production of that facility?

[Dominique Boies]

Are you talking about the effective production of the product or building the plant?

[Greg McLean, Conservative, Calgary Centre, AB]

Building the plant.

[Dominique Boies]

That's a very good question. We haven't calculated that: it's the first time I've been asked that question.

The way it works right now is the life-cycle analysis looks at every entrant, or every product, or each input in the production.

I'm not sure if this includes the construction, that is, the energy used for the construction. I would have to get back to you, Mr. McLean, on this. I don't have an answer for you.

[Greg McLean, Conservative, Calgary Centre, AB]

If you could, please do, because it's that whole life-cycle analysis that I think the committee would really benefit from. Thank you, Mr. Boies.

I'll move back to Ms. Hansen here.

Ms. Hansen, in relation to some of the questions you may have heard here today, can you let the committee know, if you have it at hand, how much electricity we would have to build in Canada if we were to do away with the natural gas network?

[Cynthia Hansen]

Thank you, Mr. McLean.

I'll give you a reference point for Ontario. In Ontario you would have to build out at least 90,000 megawatts to eliminate what we have in Ontario. I think we, through the Canadian Gas Association, have thought that it's going to be close to $1 trillion, just as a high-level estimate.

Maybe I'll ask my colleague Jean-Benoit to comment on Quebec.

[Jean-Benoit Trahan, Director, Eastern Region Operations and Gazifère, Enbridge Inc.]

Good afternoon, everyone.

For Quebec, just removing natural gas—we're not talking about oil and petroleum related to cars, but just removing natural gas—would be less impactful, but it's 15,000 megawatts. We'd have to build a new Grande Baleine project in Quebec. That is not under construction, actually, so it's just not possible to do it.

[Greg McLean, Conservative, Calgary Centre, AB]

Thank you very much. Thanks for your reference to 15,000 megawatts being equivalent to a Grande Baleine project. We're talking about a substantial amount of power here that would have to be replaced.

I think I still have a few minutes here. I'm going to flip around here to Mr. Verlez.

Mr. Verlez, one of the things you talked about is that one role of the federal government is to facilitate access to funding. I know you're owned by one of the deepest financial organizations in Canada. If anybody has access to all kinds of funding, it's your organization. Could you further explain what you mean by the federal government's facilitating access to more funding for the Brookfield entity, please?

[Frédéric Verlez]

What I could say is that, as Brookfield is investing billions of dollars every year in renewable assets around the globe, we have a new transition fund that's just been announced. We aim at investing in renewables and any new technology that's in the transition.

The thing is, we need these projects to be financially viable. The traditional banks in Canada do not have a lot of appetite for these new types of projects, such as they would have for, let's say, a wind farm or a solar project. To facilitate the financing of these projects the government can provide support, through the Canada Infrastructure Bank, or in other ways, to compensate for that lack of appetite of the financial institutions—at least for the first projects, until they get comfortable enough that these projects can be financed on their own.

I hope that answers your question.

[Greg McLean, Conservative, Calgary Centre, AB]

It does. Really, you're talking about social financing through subsidized means of the government.

[Frédéric Verlez]

That's right, or loans from CIB that would take, maybe, an additional risk from the start of the technology and the fact that these projects are not currently deployed in large scale.

[Greg McLean, Conservative, Calgary Centre, AB]

So that's unpriced risk.

[Frédéric Verlez]

Yes, that's right.

[Greg McLean, Conservative, Calgary Centre, AB]

Okay. Thank you very much.

[Frédéric Verlez]

You're welcome.

[The Chair, Liberal, James Maloney]

Thank you, Mr. McLean.

Last up today is Mr. Weiler again.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thank you, Mr. Chair.

I'm going to jump back into a topic that's been brought up by Mr. Boies, but I'd also like to ask Madame Trudeau the same question.

Mr. Boies, you mentioned that we need to develop the market for these clean fuels locally. You mentioned some examples in California and the Netherlands, where there are attractive markets for low-carbon fuels. I think you also mentioned B.C., with the LCFS as something that really helps create that market.

At the federal level we do have the clean fuel standard, which, of course, requires refiners to produce fuels, increasingly, with lower carbon intensity. With this in mind, I'm wondering what you see as needed over and on top of this to create this type of market across Canada.

[Dominique Boies]

I would say that's a start, but like one of your colleagues mentioned, there's no clear obligation and there's no clear mandate with pre-set targets for blending biofuels, for example. This would enable.... Then, if people who are obligated to meet the target, but don't meet their target, there would be a cost attached to it. This would create an environment where there's a cost of compliance. Either you buy the product, or if you don't buy the product and you don't comply, there's a cost to be incurred towards society.

That's the other thing that is missing in the current framework. If we want this to happen, there needs to be a consequence.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thank you.

I'll ask the same question of Madame Trudeau.

[Stéphanie Trudeau]

As Mr. Boies said, we need to use both the carrot and the stick, that is to say the regulations that impose minimums and provide predictability. In Quebec, we're talking about 5% by 2025, but we haven't yet passed the regulations for the 10% by 2030 target. We should be talking about 20%, 25% and 30%, which would create an obligation. The binding aspect is really important.

The clean fuel standard will add a lot of value to renewable natural gas. Our refiners are already asking a lot of questions about it.

Various other sectors also need help. I'm thinking of cement plants that still use coal and are competing with other cement plants that also use coal, but are under a different government jurisdiction. If we want to force our cement plants to become cleaner, but they can't move towards electrification, perhaps we should help them initially pay the price difference between coal and natural gas, and then gradually decrease the subsidy.

The price difference between coal and natural gas is very significant, and some customers would initially need a little help with operating expenses to make the transition.

If I may, I would like to talk about something we haven't talked about today, namely the economic benefits. We have talked about the costs of RNG, but one study shows that potential construction projects in Quebec would create 88,000 jobs, 15,000 of which would be in production. So we haven't talked about the major economic benefits of these circular economy projects.

I can forward the study to the committee at a later time.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Absolutely. I know our hydrogen strategy has estimated that there could be over 350,000 jobs just in that sector by 2050 in Canada, so we definitely need to keep in mind the opportunity that's ahead of us here.

With that in mind, Ms. Hansen, you mentioned in your opening statement that you're looking to develop a green hydrogen corridor. I'm hoping you could expand a little more on these plans and what's driving them.

[Cynthia Hansen]

Because of where our existing infrastructure is located in Ontario, we have our compressed natural gas refuelling stations along the Highway 401 corridor. Then we have our current power-to-gas green hydrogen facility located in Markham, Ontario.

We're looking at how we can tie into that existing infrastructure. The CNG stations can be converted to hydrogen and we can use them as hydrogen fuelling stations. We also have an opportunity with our existing infrastructure in Ontario and Quebec to look at how we can serve and create that dynamic.

We service, obviously, the Sarnia industrial area as well. Because of our existing infrastructure, particularly in Ontario and Quebec, we can work with some strategic players to really develop that market.

We also have a similar opportunity in Alberta with our existing infrastructure there, and into B.C., along with Fortis, how we serve with our gas pipeline infrastructure.